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“New Coke”- is it??

Market Research is the methodical, factual collection as well as investigation of data regarding the intended market and marketplace rivalry. It is an essential tool that will assist bigwigs in decision-making by utilising its results. It should be carried out continually regardless of the present situation of a company in order to stay up to date with the market trends.

Market Research: a boon or a bane for Coca Cola..?

Coke has been a universal refreshment drink among customers which has a strong brand value where customers choose coke as their soft drink of choice.

The major problem faced by Coca Cola in the early eighties was their continually dwindling market share that was taken up by their 87 year old competitor, Pepsi. Pepsi conducted a blind taste test in the form of a “Pepsi taste challenge” wherein the results showcased that consumers preferred sweeter-tasting Pepsi over conventional Coke. They also realised that their better tasting soft drink was sufficient to reduce the market gap between Pepsi and Coke which couldn’t be stopped by Coke irrespective of the resources used for advertising.

(Entrepreneur, 2014)

Pepsi garnered major success when they started conveying these findings to buyers through their TV advertisement “Pepsi Challenge“ where the coca cola drinkers salivated for the drink they presumed to be cola which was then unveiled to be Pepsi. This campaign made Pepsi the front-runner in the market.

Did you take the Pepsi challenge?

Coca cola had sufficient reason to believe that taste was the pre-eminent reason for Coke’s decrease in market share in the late 1970’s up to the mid 1980’s. As soon as Coca Cola realised their market share was declining; they confidentially invested sufficient resources to revamp their original recipe in order to counteract their shrinking sales. The market research was carried out by shelling out a stupendous sum of 4 million dollars. The marketers carried out Qualitative research by interviewing 200,000 consumers by asking them about their taste preference from the several concoctions utilised in the blind test. The drink formulation that was largely preferred by about 60 % of the participants was a completely new brew over the original coke and Pepsi. The results were reasonable to finalise the launch of the “New Coke.”

The Coca Cola company rolled out the new formulation under the brand name of “New Coke” on April 25, 1985 which was an exhaustive change from their original formulation that had been in place since the past century. The company intended to refurbish its brand value and up scale its market share in its largest consumer market, United States rather than creating a wave of consumer opposition that followed.

(EnterpriseMediaVideo, 2016)

Now addressing the elephant in the room; “What went wrong?”

Primarily, there was a flaw in the research methodology.

The decision was made solely on statistical results assuming taste was the deciding factor that influenced consumer behaviour. The research failed to consider the sentimental value of the consumers in relation to the product. The consumers weren’t rightfully informed that the new formulation would replace the original product in the market as they were simply asked “Which formulation did you prefer?”. Rather, the question should have been re-framed as “Would you like this new drink over Coke?”

Furthermore, the company underestimated the effect of the sentimental value of the original formulation.

Also, the focus group that was a part of the market research was not absolutely reflective of the opinions of others who consumed the product and the company did not make any efforts to gauge how would the response of the focus group change in relation to the opinion of other consumers from various walks of life had they been subject to the research study as well.

Lastly, market research was devoid of a quantitative analysis.

All in all, the consumer outrage which transpired was the result of inadequacies in the research methodology and implementation of findings. The study lacked quantitative data due to which the research findings were not absolutely reflective of the issues that the research was meant to address. The quality of research was substandard due to which they suffered a setback. However, Coca cola learned their lesson in time and within three months launched the original Coke that has ruled the markets and continues to be the first choice of consumers over and above other soda drinks in the market.